The Ministry of Economy has developed criteria for reporting on sustainable development

The Ministry of Economy has prepared recommendations for large companies publishing sustainability reports (ESG). The document describes criteria for three blocks of indicators – environmental, social and governance. Businesses are also asked to show in such reporting R&D expenses, the volume of “sustainable” investments and the share of purchases from Russian suppliers. According to ACRA, by the end of the year two-thirds of the 50 largest Russian corporations could publish such reports – mainly export-oriented metallurgy, chemical industry and mining companies.

The Ministry of Economy has prepared methodological recommendations for reporting on sustainable development – department order published Online. It is expected that they will be implemented by state corporations, state-owned companies, as well as large businesses with annual revenues of more than 10 billion rubles, as well as companies placing sustainable development bonds on the stock market.

Among the general criteria, companies are recommended to disclose indicators of revenue, net added value (the difference between revenue and recognized expenses), research and development expenses, labor productivity, amounts of accrued and paid mandatory payments, as well as the share of purchases of Russian goods and purchases from SMEs, volume sustainable (including green) investments and investments in projects related to achieving technological sovereignty and structural adaptation of the Russian economy.

In addition, the document lists three blocks of indicators desired by the authorities. Environmental indicators include indicators of economic vulnerability, water consumption, waste volumes and emissions. It also proposes to take into account the costs of environmental protection, consumption of renewable and low-carbon energy and energy efficiency indicators. In the block of social criteria, it is recommended to take into account labor costs, the number of employees (including disabled people), average wages broken down by gender, occupation groups and age, costs of labor safety measures, employee training and participation in supporting social programs, and also the staff turnover rate. Finally, in the management block, such criteria as the number of meetings of the board of directors and their attendance rate, the number of members of the board of directors (by age), participation in indices and ratings of sustainable development, protection of the rights of small peoples, anti-corruption practices and the proportion of women managers in the total number of managers (including on the board of directors or supervisory board).

According to ACRA, by the end of the year two-thirds of Russian companies from the list of the 50 largest can submit such reports. Most of these companies belong to the metallurgical, chemical, mining, and electric power industries. Companies in the financial sector and mechanical engineering are less interested in publishing such reports, the agency noted earlier. Note that starting this year, companies are already required to report on greenhouse gas emissions, but without the requirement to publish this data. Issuers of the sustainable bond sector, on the contrary, are mainly state-owned banks and companies with state participation – the total volume of placements this year could reach 115 billion rubles, ACRA estimated.

The Bank of Russia is also considering the possibility of large businesses taking into account ESG factors: in the “Main Directions for the Development of the Financial Market for 2024 and the Periods of 2025 and 2026,” the regulator indicated that it plans to monitor financial market participants’ compliance with recommendations in the field of sustainable development (including assignment of ESG ratings), and based on its results, make a decision on the advisability of including a number of recommendations in the regulation. The Central Bank is ready to consider ESG incentive measures for issuers and investors, but only after assessing the effect of banking regulation on projects of technological sovereignty and structural transformation of the Russian economy.

Tatiana Edovina